Previous years unused pension allowances can be carried forward so you can exceed the £40,000 tax free limit this year. Higher earners should make the most of their pension allowance now, as it is under threat.

Following the start of a new tax year, it’s always useful to stay abreast of changes to your responsibility. Certain legislative updates in 2019 have been overshadowed by the spectre of Making Tax Digital for VAT, causing smaller (but significant) changes to be overlooked.

Let’s start with a thought experiment. I’ll set the scene. You’re a limited company owner, and you, as the director, are the sole employee. You also - understandably – love learning about tax. You open up the Monday morning paper to find some exciting news - HMRC has hinted there are going to be some big changes in the upcoming UK budget.....

Undoubtedly the biggest source of tax confusion for prospective landlord clients that we speak to here at TaxKings relates to the changes to tax relief for residential landlords, introduced by the UK Government in April 2017.

Making Tax Digital for VAT (MTDfV) comes into effect from 1st April 2019. With Chancellor Philip Hammond announcing in his 2019 Spring Budget that MTD for other taxes will not be mandated until at least 2021, all of our focus is now on the VAT implementation.

Tax planning for small businesses is not always straightforward, in fact it can be a serious minefield for the unwary. The chances are however that you and your business could almost certainly pay less in tax, with help from your tax advisor. Here are some tips to get you started.

There may be a time when you need to loan money to or borrow money from your own Limited Company. Director’s loans are wrapped up in fiddly bits of legislation. When borrowing cash from your company, care must be taken. You must ensure that you fully understand the tax implications before you take any kind of loan from your business.

Value Added Tax (VAT) is a standard consumption tax levied on almost all goods and services in the UK. If you’re a contractor, working through your own Limited Company, registering for VAT could significantly improve your tax efficiency.

Are you a landlord? Maybe considering a new home, and letting out your current property? Maybe you’re working abroad for a while, and renting your home to make ends meet? Before you take the plunge (or even if you took it years ago), this article aims to help you make the most from your rental income.

IR35 is a tax legislation used to distinguish between employees and genuinely self-employed contractors. Last month we compiled a comprehensive guide to IR35. Now, we take an in-depth look at how the ‘off-payroll working’ rules, introduced to the public sector in 2017, will be extended to medium and large-sized businesses in the private sector from April 2020.

As a contractor, working through your own limited company, one of the main benefits available to you is the ability to claim business expenses. Claiming expenses correctly can reduce your tax bill, it’s a vital part of running your company tax efficiently.

Your Tax Code tells your employer how much tax to take off your pay. What if your code is wrong?
In the past 4 years, 1 in 3 employed taxpayers have been overcharged tax because their employer has received the wrong code from HMRC!

IR35 is a complex piece of legislation used to distinguish between true self-employed contractors and employees. As a contractor, it’s important that you have an awareness and understanding of IR35 to ensure that you’re paying the correct amount of tax and National Insurance. Here’s a definitive introduction to IR35 to help you understand how it works.

There's every chance that you are not yet aware of Making Tax Digital (MTD). However, if you are a landlord with rental income - (that's income, not profit) – greater than £10,000 annually then you should be. MTD is the biggest shake up to the UK tax system since the advent of Self-Assessment in the 1990s. And it affects you, from April 2020 at least.

Many new or aspiring landlords will often read, with alarm, about a campaign or some form of crackdown by HMRC on buy-to-let landlords, accompanied by warnings that landlords could potentially face tax bills of “thousands of pounds” plus interest, surcharges and penalties.
What is it though that HMRC are actually looking for? Here’s an overview of the main categories of mistakes.

Organised properly, freelancing/contracting can be the most rewarding way to make a living. Skilful tax planning can transform your finances - and with 15% of the workforce self-employed, financial services providers are at last offering the support contractors and freelancers need.

Many new or aspiring landlords will often read, with alarm, about a campaign or some form of crackdown by HMRC on buy-to-let landlords, accompanied by warnings that landlords could potentially face tax bills of “thousands of pounds” plus interest, surcharges and penalties.
What is it though that HMRC are actually looking for? Here’s an overview of the main categories of mistakes....

Organised properly, freelancing/contracting can be the most rewarding way to make a living. Skilful tax planning can transform your finances - and with 15% of the workforce self-employed, financial services providers are at last offering the support contractors and freelancers need....

* An annual transferable allowance between spouses of £1,060 was introduced for 2015/16 tax year. This year, 2018/19 the transferable allowance increases to £1,190. A spouse or civil partner who is not liable to income tax above the basic rate may transfer up to £1,190 of their unused personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. This measure will only be of benefit to those in the lower income bracket.

From 2016-17 onward, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit

The Age Related Income Limit for 2017/18 is £28,900. if you are over 65 years and your earnings are above £28,900 - your Personal Allowance will be reduced by £1 for every £2 you earn over that £28,900 limit.

Tax Brackets

Tax Rate

2016/17

2017/18

2018/19

Change

Basic rate 20%

£0 - £32,000

£0 - £33,500

£0 - 34,500

widened by £1,000

Higher Rate 40%

£32,001 - £150,000

£33,501 - £150,000

£34,501 - £150,000

cut by £1,000

Additional Rate 45%

£150,001+

£150,001+

£150,001+

no change

NOTE: These rates are applied after your tax free allowance has been deducted from your gross wage.

The widening of the Basic Rate tax bracket and the increase in the Basic Personal Allowance means you can earn more this coming tax year before crossing into the 40% tax bracket. If you take the new Basic Tax Rate threshold of £34,500 and add it it the new Basic Personal Allowance of £11,850, we see that for 2018/19 you can earn £46,350 before you cross in to 40% tax territory.

Change in take home pay after tax and NI

Gross Wage

Net Pay 2016/17

Net Pay 2017/18

Net Pay 2018/19

Difference

£10,000

£9,767

£9,780

£9,811

+31

£20,000

£16,767

£16,880

£16,983

+103

£30,000

£23,567

£23,680

£23,783

+103

£40,000

£30,367

£30,480

£30,583

+103

£50,000

£36,466

£36,776

£37,019

+243

£75,000

£50,966

£51,276

£51,519

+243

£100,000

£65,466

£65,776

£66,019

+243

£125,000

£75,566

£75,676

£75,776

+100

£150,000

£90,066

£90,176

£90,276

+100

Source listentotaxman.com®

National Insurance

There have been no changes to the percentage of National Insurance Class 1 contributions, they remain at 12% for employees, and 2% above the upper earnings limit. Employers Class 1 have remained the same at 13.8%. The limits and thresholds have changed, as illustrated in the table below. See HMRC for a more detailed view of NIC changes to other Classes.

National Insurance Bands

Description

2016/17

2017/18

2018/19

Change

Weekly Lower earnings limit, primary Class 1

£112

£113

£116

+ £3

Weekly Upper earnings limit, primary Class 1

£827

£866

£892

+ £26

Weekly Primary threshold

£155

£157

£162

+ £5

Weekly Secondary threshold

£156

£157

£162

+ £5

Weekly Upper Secondary Threshold for U21s

£827

£866

£892

+ £26

Apprentice Upper Secondary Threshold for U25s

£827

£866

£892

+ £26

Our Favourite Tax App?It's Simple

ListenToTaxman have teamed up with SimpleTax, the online self-assessment app to bring you, what is in our view, the easiest way of calculating and submitting your tax return we’ve seen so far. Key in your income and expenses into the app, and it will flag up any unclaimed allowances. Simple.

Once you’re comfortable with the information you’ve entered, simply submit via the app to HMRC. You’ll just need your Tax Reference Number - found on most tax correspondence. SimpleTax let you use their software free for 14 days. If you don’t think it’s right for you - don’t pay anything. If you do to choose to submit your tax information via the app, then at most of you will be charged £25 for their standard service (silver).

The Personal Tax Free Allowance reduces where the income is above £100, 000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age.

2. These allowances reduce where the income is above the income limit for age-related allowances by £1 for every £2 of income above the limit. For the 2010-11 year the Personal Allowance for people aged 65 to 74
and 75 and over can be reduced below the basic Personal Allowance
where the income is above £100,000.

Relief for the Married Couple's Allowance is given at the rate of 10 per cent.

* The 10 per cent starting rate applies to savings income only. If your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply.

As always, this calculator is an organic tool, evolving based on your suggestions. If you feel you would like a feature added to the
calculator, let me know support@listentotaxman.com

The UK PAYE tax calculator / salary calculator is active since 1998. We are happy to be considered as the number one calculator on the
internet for calculating earnings, proving an invaluable tool alongside any small business accounting solution or corporate payroll software. This simple tool calculates tax paid and national insurance contributions. The most recent rates and bands from HMRC inland revenue and UK budget decisions.

Select Year: This salary calculator has the capability to display your pay details, as they would have been, back as far as 1999. Remember that the tax year begins on April 6th of each year

Tax Region: From the 2017/2018 tax year, scottish parliament has set its own tax rates and bands.

Married: Married couples over the age of 65 may have an increased tfa, and do not pay national insurance. Blind: Additional allowance is made available to blind persons. No NI: Click this if you want to exclude national insurance contributions from the calculations

Student Loan Repayment: If you were a student, and availed of a student loan, you will begin to repay this loan once your earnings go above a certain threshold. This years threshold begins at £15,000. Student loans will be repaid at a rate of 9% of the additional income over and above this threshold. Click to include the repayment in your calculations.

Age Group: Additional allowances, and reduced / no National Insurance contributions are available for individuals over the age of 60* who are still in employment.

Additional Allowances/ Deductions: If you have any additional allowances you wish to include in your calculations, include them here. Equally, if you have any deductions that you would like to take into consideration; add them here with a minus (-) symbol in front of the amount.

Tax Code: Tax Code: If you know your code, include it here. If you are employed and do not complete a self-assessment tax return every year, you might have been given the wrong code by HMRC. Please see our guide 7 Common Reasons you Could Have The Wrong Tax Code in our Tax Guides section. By including your code, all other options will be disregarded.

Childcare Vouchers: If your employer provides childcare vouchers, you can reduce your tax liability by sacrificing a portion of your salary for the same value in childcare vouchers. If you are a higher rate tax payer, you stand to lose out if you have not signed up to a childcare voucher scheme by April 5th 2011.

If you signed up to your Childcare Voucher scheme before April 6th 2011, and are a higher or top rate tax payer, then you are entitled to higher tax savings from Childcare Vouchers.

Gross Income Per Year / Month / Week / Day: Select the time for which you are paid. All calculations will be based on an full years income at the rate specified. E.g. if you specify you are earning £2,000 per mth, the calculator will provide a breakdown of earnings based on a full years salary of £24,000 ( or £2,000 x 12 ).

Wage Summary: Select the columns you would like to display on the wage summary table.

Pension:If you currently have a pension enter the amount that you pay into the pension on a regular basis. This can be entered in a percentage format e.g. 4%, or in a numeric format e.g. 500. Note When entering pension in a numeric format please use the same frequency as you used to enter your gross salary. E.g. if you specified an annual gross salary, the amount entered in the pension box will be for your annual pension contributions .